Broker vs Bank for Remortgage

What Does a Mortgage Broker Do?

A mortgage broker is an intermediary who searches the mortgage market on your behalf, compares products from multiple lenders, and recommends deals that suit your specific circumstances. Brokers are qualified mortgage advisers who must be authorised and regulated by the Financial Conduct Authority (FCA) to provide mortgage advice in the UK.

When you use a broker, they will typically start by understanding your financial situation, including your income, outgoings, property value, existing mortgage details, and what you want to achieve from remortgaging. They then search their panel of lenders to find the most suitable products and present their recommendations to you.

Brokers handle much of the application process on your behalf, including submitting the application, liaising with the lender, chasing valuations and keeping the process moving forward. They act as a single point of contact throughout, which can simplify what can otherwise be a complex and time-consuming process.

There are two main types of broker: whole-of-market brokers who can access products from across the entire lending market, and tied or multi-tied brokers who work with a limited panel of lenders. For the broadest range of options, a whole-of-market broker is generally preferable.

Some brokers also have access to exclusive deals that are not available to borrowers who approach lenders directly. These broker-exclusive products can sometimes offer better rates or lower fees than the equivalent deals available on the high street.

Brokers earn their income either through fees charged to the client, commissions paid by the lender when a mortgage completes, or a combination of both. They are required to disclose their fee structure upfront before providing advice, so you should always know what you will be paying before you commit.

What Does Going Directly to a Bank Involve?

Going directly to a bank or building society for your remortgage means applying to a single lender without using an intermediary. You can do this by visiting a branch, calling the lender, or applying online through their website.

When you go direct, you will only be offered products from that specific lender's range. The bank's adviser can explain their products to you and recommend which of their deals might suit you, but they cannot compare their products against those offered by other lenders. This means you are relying on that single lender having the best deal for your circumstances.

The experience of going direct varies significantly between lenders. Some offer excellent online application processes with dedicated case managers, while others may involve lengthy branch appointments and slower processing times. High street banks generally have well-established processes but may have less flexibility for unusual circumstances.

One advantage of going direct is that you avoid paying a broker fee, which can save you several hundred pounds. However, this saving is only meaningful if the deal you get directly is as competitive as what a broker could find. If a broker secures you a rate that is even 0.1% lower, the savings over a two or five-year term will typically far exceed the broker fee.

Some lenders offer exclusive direct-only deals that are not available through brokers. These are designed to attract borrowers who prefer to go direct and can occasionally be very competitive. However, even with direct-only deals in the mix, a whole-of-market broker can usually identify whether you would genuinely be better off going direct or using a broker-sourced product.

Going direct can work well if you have a very straightforward situation, you are confident in comparing deals yourself, and you have the time to approach multiple lenders individually. However, for most borrowers, the convenience and expertise of a broker outweighs the effort of doing it all yourself.

Comparing Choice, Advice and Expertise

The most significant difference between using a broker and going direct is the breadth of choice and quality of advice available to you.

Choice: A whole-of-market broker can compare products from dozens or even hundreds of lenders, including high street banks, building societies, specialist lenders and private banks. Going direct limits you to a single lender's products. Even if you approach several banks individually, you are unlikely to cover the full market and you will be doing all the comparison work yourself.

Advice quality: A broker provides independent advice based on your circumstances and the full market. They have no incentive to recommend one lender over another unless it is genuinely the best option for you. A bank adviser can only recommend from their own range, so their advice is inherently limited. They may have a very good product for you, but they cannot tell you if there is something better elsewhere.

Specialist knowledge: Brokers who work across the market develop deep knowledge of different lenders' criteria, quirks and processes. They know which lenders are more flexible with self-employed income, which ones have better affordability calculations, and which ones process applications fastest. This specialist knowledge can be particularly valuable if your situation is not entirely straightforward.

Complex situations: If you have any complicating factors such as self-employment, adverse credit, an unusual property type, or a complex income structure, a broker is almost always the better choice. They can match your circumstances to lenders who are most likely to approve your application, avoiding wasted applications and unnecessary credit searches that could affect your score.

For straightforward remortgages where you have a standard employment situation, good credit and a mainstream property, the difference in advice quality may be less pronounced. In these cases, going direct to a competitive lender can work perfectly well. However, you still lose the benefit of knowing that someone has checked the whole market on your behalf.

Cost Comparison: Broker Fees vs Going Direct

Understanding the costs of each approach is essential, but it is important to look beyond just the broker fee and consider the total cost of the mortgage over the deal period.

Broker costs:

• Fee-free brokers - Many brokers charge no fee to the client and are paid entirely by commission from the lender. This commission is built into the mortgage rate and is the same regardless of whether you use a broker, so you are effectively getting their service for free.
• Fee-charging brokers - Some brokers charge a fee, typically between 300 and 500 pounds, though it can be higher for complex cases. In return, they may offer a more personalised service or have access to a wider panel of lenders.
• Commission plus fee - A few brokers charge both a fee and receive commission. This should be disclosed upfront and you should consider whether the additional service justifies the cost.

Going direct costs:

• No broker fee - You avoid paying any intermediary fee
• Potentially higher rates - Without market-wide comparison, you may not get the most competitive rate available
• Time cost - Researching, comparing and applying to multiple lenders yourself takes time that has a value

The critical calculation is whether the broker fee, if any, is offset by the savings achieved through accessing a better deal. On a 200,000-pound mortgage, even a 0.1% improvement in rate saves approximately 200 pounds per year. Over a five-year fix, that is 1,000 pounds, which comfortably outweighs most broker fees.

Fee-free brokers represent particularly good value because you get professional advice and market-wide comparison at no direct cost. The commission they receive from the lender does not change the rate you pay, as this commission is built into the rate regardless of whether you use a broker or go direct.

It is always worth asking any broker about their fee structure before engaging their services. A good broker will be transparent about how they are paid and should explain whether they receive different levels of commission from different lenders, which could theoretically influence their recommendations.

The Remortgage Process: Broker vs Direct

The practical experience of remortgaging differs depending on which route you choose, and for many borrowers, convenience is just as important as cost.

Using a broker:

• Initial consultation, usually free, to discuss your circumstances and goals
• The broker searches the market and presents recommended options
• You choose a product and the broker handles the application
• The broker chases the lender, valuer and solicitor to keep things moving
• A single point of contact for questions and updates throughout the process
• The broker can intervene if there are any issues with the application

Going direct to a bank:

• You research available products yourself, either online or in branch
• You apply directly to the lender, providing all required documentation
• The lender processes your application through their standard procedures
• You may deal with different people at different stages of the process
• You need to chase progress yourself if things stall
• If the application is declined, you start again with another lender

Brokers can also save time by ensuring your application is submitted correctly with all required documentation from the outset. This reduces the risk of delays caused by missing information or incorrect paperwork. They know exactly what each lender needs and can pre-empt potential issues before they arise.

If your application runs into problems, a broker can often resolve issues more quickly than you could yourself. They have established relationships with lender underwriters and processing teams, and they know how to present your case in the best light. If one lender declines your application, a broker can quickly redirect to an alternative without the delay of starting a new search.

For time-poor borrowers, the convenience factor alone can make using a broker worthwhile. The process of researching, comparing and applying for a remortgage can take many hours if you do it yourself. A good broker distils all of this into a straightforward conversation and handles the rest.

Which Approach Should You Choose?

For most UK homeowners, using a whole-of-market mortgage broker is the recommended approach for remortgaging. The combination of broader choice, expert advice, and a managed process typically delivers a better outcome than going direct, often at no additional cost if you use a fee-free broker.

A broker is particularly recommended if:

• You want confidence that you are getting the best deal available across the whole market
• Your circumstances are not entirely straightforward, such as self-employment, adverse credit, or a complex income structure
• You do not have the time or inclination to research and compare deals yourself
• You want someone to manage the process and keep things moving on your behalf
• You are remortgaging for the first time and want professional guidance

Going direct may be suitable if:

• You are confident in your ability to research and compare mortgage products
• You have a very simple financial situation and a standard property
• Your existing lender is offering a competitive retention deal that you are happy with
• You want to access a specific direct-only product from a particular lender
• You enjoy managing financial decisions yourself and have the time to do so

One approach that combines the best of both worlds is to consult a broker first, see what they recommend, and then check whether your existing lender's retention deal beats the broker's best option. If it does, you can go direct with your current lender. If it does not, the broker has already done the work to find you a better deal elsewhere.

Whichever route you choose, make sure that any adviser you speak to, whether a broker or a bank adviser, is authorised and regulated by the FCA. You can check this on the FCA's Financial Services Register. This regulation ensures you receive suitable advice and have access to the Financial Ombudsman Service if anything goes wrong.